Walston &Co. – – – – – I n c . – – FILE CO Mem bers New York Stock Exchange NEW YORK SAN FRANCISCO lOS ANGELES PHILAOELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER December 24, 1959 Upon my return from my around-the-world trip I fmd the market averages show very little change from when I left New York on November 27th. The Dow-Jones Indus- trial average has failed so far to penetrate the August high of 683.90, but came quite close to that figure on Monday of this week when the intra-day high was 681. 54. One dis- turbing technical development is the rather poor action of some of our breadth-of-the- market studies on advances and declines and new highs and lows. This action could be accounted for by year-end irregularity and tax selling. If so, these indicators should improve after the turn of the year. They must be watched closely. – – – Mytripwas most satisfactory. A day's stop in-San Frandsco was-a'good start- Ing point. Hawaii was most beautiful, as always, and the growth potentlal of our newest state matches its natural charm. A trip to Tokyo followed. I was most impressed with this city and its terrific post-war comeback. The people are hard working and resource- ful, and the economic climate encourages this background. I visited the Tokyo Stock Ex- change which is a most modern and efhclent market. Tokyo is the world's largest city in terms of population, and the growth potentials are most favorable. Hong Kong surpassed even my expectations. I am quoting below some excerpts from the First National City Bank of New York Monthly Letter. Hong Kong's recent economic growth is one of the outstanding success stories m the Far East today. This achievement has been one of private enterprise operating within a free market economy A great seaport and commercial center, Hong Kong grew to prospenty on the entrepot trade with China, its location convenient for trans- shipment of goods to and from the West. But when the mainland fell to the communists, and the Korean War brought a United Nations embargo was suddenly changed. . ((D A W China, all this When necessity forced Hong Kong to find o' ome to replace the lost China trade, its resourceful ti ew opportunities were vigorously sougMAn Southeast ASIa A 0 . SlilP mg.and some small amount of light industry were already C y, expansion faced difficulties lack of fuel, scarcity of 'mpetitionfromwellestablishedforeign producers, not to men 'on tli e p that the Chinese communists might some day cho s 0 u e little island colony. .1t there were assets too. Skilled labor an 1 ere augmented by an influx of refugee labor and capital from the m nd. t important of all, the economic climate was favorable to y was expanded and, at the same time, energetic efforts were made to deve arger export markets. New products were introduced and old ones adapted to consumer needs In different countries In the past decade factory employment has tripled. Despite fluctuations in over- all trade, exports of Hong Kong manufactures have climbed steadily, from a bare 100/0 of total export sales in 1947 to nearly 700/0 thIS year. In value terms this represents a rise from about 40 million to almost 400 million, with more than half comprised of textiles and apparel. Hong Kong's success in attracting foreign investment and achieving rapid de- velopment despite inherent disadvantages IS striking testimony to the truth of liberal economic principles As the Hong Kong Government itself states in Its latest annual Jeport The predominant theme in International discussions about ASIa in recent years has been the urgent need for outSIde promote . economic de- velopment and to raise the standard of living Hong Kong, .however, has (been) . the exception. This small Colony, almost entirely lacking in natural resources other than the indomItable will and enterprise of ItS people, has not only belied all prophecIes of economic disaster, but also established itself as a vigorous industnal power This development has been achieved without major recourse to outside economic assistance. The main impression I gathered from my trip is that both In the Far East and ir, London and Paris conditions are extremely prosperous and the potentials for world trade over the next twenty years are tremendous. A MERRY CHRISTMAS TO YOU ALL FROM MYSELF AND THE STAFF. 1nti.And u1RJfl1Tia c!r6llmatanees is to be conRtrued as, at! off.!!' ta scll or uErk.MJJWQr .. to herem The Jnformation tMtb tc'l!'urncy or completeness and oplrllOn are subject the to furmshmg therCQf change 'Ithout n IS ot l Wnotl.VtS no . &. 0 te; pUe!tors, as. a representa Stockholders unci mrormal commentary on day to and-MlifoflMr1!lan Interest In day market news and not as a the securltle1 mentioned hereln'Iilis marKet e complete analysIs AdditIOnal mrormatlOn with ter IS IrI n respect to any an prCBented merel). us a general securities referred to herem 'Ill fllrmshed upon request 1\ 301 -'

NEW YORK Walston &- Co. Inc – – – – – Membe1S New Y01k Stock Exchange SAN FRANCISCO LOS ANGELES PHILADELPHIA OFFICES COAST TO COAST ANO OVERSEAS FILE COpy CHICAGO December 30, 1959 As the end of the year arrives economists, security analysts, and financial writers are issuing forecasts for 1960. The most interesting thing to note about these forecasts is their unammity. Most analysts appear to be looking for new highs in the 700-750 range to be made sometime m middle or early 1960, followed by a reaction in the latter half of the year. From a technical pOint of view, this forecast seems plausible, and it has been the View adhered to by thiS letter. A forecast is value, however,unless itaids.usinc;tetermining investment policy. – rn–determimng such policy, -it is necessary-to realize that the market is not a one-way street — that it can go down as well as up. Jf, indeed, the Dow-Jones Industrials do advance to 750, this would constitute a gain of some 12 from current levels. Considering the fact that the market has already advanced some 300 since 1949, and is statistically rather high, a possible 12 advance seems somewhat picayune when measured against the downside risk inherent in a great number of stocks. Admittedly, the outlook for certain individual issues appears much brighter than that for the averages. After a ten-year bull market, however, a good deal of risk must be said to be present. This rlsk is underscored by the rather desultory breadth-of-the-market action in recent weeks. The market defimtely appears to be losing upside momentum and this loss, combined with the factors mentioned above, certainly constitutes a caution signal. It must be noted, however, that the unfavorable breadth figures may be distorted somewhat by tax loss selling and by rates. For example, on Tuesday, December 29th, there wek onl e -ghs versus some forty-five new lows. Of these forty-five WJ.-9w we ,twenty-five were preferreds which move in response to – – The effect of tax sellin However, as this letter has pre past twenty years has pr c – more difficult fect at the end of each of the fClii'arket action which can be helpful in ion, a number of note. (1) a December and ca yin ce 1935 there has been a year-end rally starting m rough into January of the following year. (2) If market has been higher for most of the given year, the December low is usually reached early in the month. The reverse is usually true if the trend has been down. This was the case m 1957 when the low was reached on December 23rd, whereas in 1958 the low was reached on December 3rd. This year, the low in the Dow-Jones Industrials was reached on December 3rd, and on Standard & Poor Stock Index the bottom was reached on December 1st. (3) In every year since 1937, an advance of 100/0, or more, from the December low has indicated an up market in the following year. (4) Since 1937, the December low, if ever broken, has always been broken before mid-TIVIarch– usually in early January. Thus, the December lows of in658.48 in the Dow-Jo-nes Industrial average and 62.70 the Standard &. Poor Index become important figures to watch. The longer the market holds above these lows, the more likely an uptrend for 1960 becomes. If the market could move 10 above these lows — to some 725 in the Dow-Jones Industrials, and to 69.00 in the Standard & Poor Index — the likelihood of an uptrend market is even greater. If, on the other hand, the lows should be broken in January, extreme caution would certainly be indicated. ….q'\A VERY HAPPY NEW YEAR TO ALL FROM MYSELF AND THE STAFF. AWTamb Dow-Jones In d 676. 97 EDMUND W. TAB ELL WALSTON & CO. INC. tl''- ….';', J